Synthesis of Policies, Politics, and Proposals Focused on HEALTH

How “Mean” Will the Senate Version of the AHCA Be?

After the passage of the American Health Care Act (AHCA) in the House on May 4th, all eyes turned to the Senate. In closed-door conversations with Republican senators earlier this week, President Trump referred to the House-passed AHCA as “mean,” apparently calling for more money in the bill and better protections for individuals buying insurance in the marketplace. While manyanalysts, stakeholders, and the general publicagree with this unfavorable characterization of the House bill, the President’s words stand in stark contrast to his celebratory Rose Gardenphoto op following the House bill’s passage.

Process Unfolding in the Senate

Given the use of the budget reconciliation process, the Senate needs 50 votes (with Vice President Mike Pence as the tiebreaker), leaving just two Republicans with the option to vote No. Because it is part of the budget reconciliation process, all included components need to have budgetary implications and therefore meet the test of the Byrd rule. The Senate has implemented “Rule 14” which fast-tracks the process, enabling them to bring the bill to the floor for a vote, skipping the committee process entirely.

In contrast to Representatives, Senators represent entire states, not narrowly defined and possibly gerrymandered districts. In theory, this means they need to take account of a broader constituency. From the outset, Republican leaders in the Senate declared that they are writing their own bill, rather than tweaking the House version. A subset of Republican Senators has been working behind closed doors, something the Clinton Administration was repeatedly criticized for during their failed attempt at health care reform in the mid-1990s.

The specific policy content and bill language remain a mystery to both policymakers and the public. Activists are finding it difficult to rally in protest, because nobody knows exactly what it is they are opposing. Senators on both side of the aisle are expressing frustration with the secretive process underway. Senator Claire McCaskill (D-MO) gave an impassioned speech last week when Secretary Tom Price testified before the Senate Finance Committee, condemning the lack of transparency, “There’s a group of guys in a backroom somewhere making these decisions.” Despite the widespread opposition, Senate leadership is not balking. Earlier this week, Senator Mitch McConnell (R-KY) said, “We’ll let you see the bill when we finally release it.”

Like the House, Senate Republicans have both moderate and conservative contingents. Early reporting suggested that the Senate bill was likely to be very different than the House-passed version, but exactly how different remains to be seen. Moderate Senators were quick to oppose many aspects of the House version, leading many to expect that the Senate would soften the draconian cutbacks in Medicaid and reaffirm some of the Obamacare consumer protections that were undermined in the House. It has been widely reported that Senate Republicans are hoping to bring their bill to a floor vote by the end of June, before the July 4th recess. However, as Senators left for the weekend, many confirmed that they had still not seen language for a complete bill and there is no clear vision for how the bill would actually impact the health care system.

With final language still up in the air, it is anybody’s guess what the Senate bill will look like. But we do know a little bit about some of the sticking points under debate:

Medicaid Expansion. One of the immediate and persistent commentaries from both Senators and the media was that there was no way that the rollbacks to the enhanced federal match for the Medicaid expansion population (those up to 138% FPL) as put forth in the House version of the AHCA would make it through the Senate. With the ACA, this new Medicaid population was provided with significantly more federal funding relative to other parts of the Medicaid program in order to help states cover the costs of this expanded access. While an earlier version of the House bill eliminated the Medicaid expansion group entirely, the passed bill phased out the enhanced federal match, moving to the regular state matching rate by 2020. So, the program can stay, but the federal portion will be cut from covering 90 percent of the costs to 57 percent (on average). Despite technically keeping the program in place, some analysts argue this could effectively end the Medicaid expansion as states would increasingly become unwilling or unable to bear the additional costs.

Of the 100 Senators, 62 of them represent states that have expanded Medicaid—20 of those are Republicans. Recent reports suggest that some of these Republicans may not be as opposed to the reduction in federal match for this population as they once were. Instead, the current debate may be about how quickly to phase out the enhanced match, perhaps slowing the House timeline a bit.

Medicaid Per Capita Caps. The Medicaid debates boil down to how much money the federal government will spend. Historically, Medicaid has been funded through the federal government directly matching state government spending, with no overall cap on funding. These rates vary between 50 percent (splitting the costs half and half between the state and federal government) and up to as high as 74 percent (the federal government putting in nearly three times as much money relative to the state), with poorer states getting more federal support.

The House-passed AHCA changes Medicaid to a per capita cap program, where federal funding for the Medicaid program would be capped on a per person basis. Rumblings from the Senate suggest there are discussions over what the growth rate should be for those per capita caps, and whether it should be more generous or more restrictive than the House version. In other words, the question comes down to how much the federal government wants to squeeze the Medicaid program over time.

Not surprisingly, this decision has significant implications for how states will care for their most vulnerable populations, with all signs pointing toward deep cuts to the Medicaid program through some combination of lower provider payments, fewer services offered, and more restrictive eligibility. Ultimately, states would have to figure out how to cover the costs of the shortfall. Moreover, the formula would lock in current state variation in spending, hurting some states more than others. Again, it seems that the question here is not whether, but rather how much the Senate will restrict federal Medicaid money flowing to the states.

State Option to Waive Pre-Existing Condition Protections and Essential Health Benefits. In the House-passed AHCA, states could get a waiver to opt out of certain Obamacare provisions, enabling insurers to charge people with pre-existing conditions more for their health insurance coverage and waiving the ten essential health benefits.

The CBO analysis of the passed bill suggests that about one-sixth of the U.S. population lives in areas that could experience market instability due to states choosing to waive these two provisions. This instability would disproportionately impact individuals with higher health care costs, since they may find insurance unaffordable.

Apparently, Senators are trying to reach a consensus on how to deal with these waivers. These waivers were added to the House bill at the last minute, fueling public outrage at the thought of returning to the pre-Obamacare days when insurers could charge sick people more for coverage and there was no national baseline for what benefits needed to be covered. Like the Medicaid expansion, early analysis suggested there was no way that these waivers could get through the Senate, but that certainty is more mixed now. It may be that the waiver of pre-existing conditions will be removed, while the waiver of the ten essential health benefits may stay.

Passage Remains Uncertain

The ability to get to 50 votes remains a key hurdle. We continue to hear dissatisfaction from key Republican Senators, which could make this whole effort fall apart. The Senate is also more dependent on the CBO analysis, suggesting they may have to reconsider whether the Obamacare taxes stay or go. Even if the Senate passes a bill, the final version would have to go through a conference committee and pass both Houses of Congress before President Trump would have the opportunity to publicly declare how “mean” he thinks this bill actually is.

Author’s Note on What’s To Come

I am preparing “Health Care System Explainers” on key topics in health care (e.g., health care costs, the value of Medicaid, stabilizing the exchanges). I will share them in the form of blog posts and downloadable PDFs over the coming weeks. If you have a request for a specific topic to cover, please let me know.